This guide helps businesses create a more engaging shopping experience that not only increase average order value but also builds lasting customer relationships.
When it comes to boosting your business’s revenue, one of the most effective strategies is to increase the Average Order Value (AOV) of your products. A higher AOV means your customers are spending more each time they make a purchase, which can significantly impact your bottom line.
By focusing on the existing customer base and encouraging them to spend more, companies can significantly boost their profits without the additional expense of marketing for new customers.
In this guide, we will explore some proven techniques to enhance your AOV and drive more sales to your digital products.
Definition of Average Order Value (AOV)
Average Order Value (AOV) is a vital metric in e-commerce that measures the average amount of money spent each time a customer places an order on your online store. It is calculated by dividing the total revenue by the number of orders. Formula: AOV = Total Revenue / Number of Orders.
For instance, if your store generates $10,000 from 200 orders then your AOV would be $50.
Thus, as a business you should aim to add extra dollar per order to run your business more profitably. However, if you’re struggling to increase average order value to run your business profitably then follow the strategies we have highlighted below.
How to Increase Average Order Value
Here are the 5 strategies that you can implement in your online business to increase average order value of your digital products.
1. Use Free Shipping Thresholds
Offer free shipping for orders above a certain value to entice customers to add more items to their cart. If you offer free shipping on every order, you’ll not be able to increase your AOV. You need to set a minimum threshold on a certain amount above which free shipping would be offered. For example, in Amazon, you need to order a minimum cart value of $35 to get the product delivered free of charge.
Thus, on your product page, you need to clearly communicate the minimum spend needed for free shipping. You could also add a Progress Indicators that show customers how much more they need to add to their cart to qualify for free shipping.
Free shipping is a powerful incentive that you can offer to your customers. By setting a minimum spend threshold for free shipping, you encourage customers to add more items to their cart. For example, if your average order value is $40, you might offer free shipping on orders over $50. This nudge often leads customers to spend more to qualify for the savings.
2. Cross Selling
Cross-selling is another popular strategy to increase the AOV. It involves suggesting complementary products that enhance the customer’s initial purchase. For example, if a customer is buying a smartphone, you might suggest a higher-end model or offer accessories like cases and screen protectors. Or, if you’re selling an online course, you can offer an ebook that complements your course.
Thus, by implementing cross-selling you can encourage customers to purchase additional, complementary products alongside their main selection. Effective techniques include:
- Product Recommendations: Highlight items that enhance the primary purchase, such as accessories, courses, ebooks, coaching, or related items.
- Bundles: Create special packages that group complementary products at a discounted price to entice buyers.
Timing is the key for successful implementation of cross-selling. You need to present cross-sell options to your customer at the right moment, such as during the checkout process.
3. Upselling
Above we learned that cross-selling involve encouraging customers to buy products that complements a main product. Upselling, on the other hand, focuses on persuading customers to buy a more expensive version of the product they’re considering.
For example, if you’re selling a beginner’s course, you can offer upsell to your main premium course with a discount to increase the average order value.
Key strategies include:
- Showing Upgrades: Present premium options with enhanced features or benefits.
- Limited-Time Offers: Use promotions that convey urgency around higher-priced items to encourage immediate purchasing decisions.
By effectively integrating both cross-selling and upselling tactics, online businesses can strategically increase their average order value while enhancing the customer’s shopping experience.
4. Product Bundling
Bundling refers to grouping related products together at a reduced price. To create effective product bundles, consider:
- Complementary Products: Combine items that naturally go together, enhancing overall utility.
- Clear Savings: Highlight the savings customers receive compared to purchasing items separately.
By utilizing both volume discounts and attractive bundling options, e-commerce businesses can successfully increase their average order value while providing customers with added value.
Thus, by bundling products together you can entice customers to spend more. By offering a package deal, you provide customers with perceived added value. For instance, if you sell skincare products, you could bundle a cleanser, toner, and moisturizer at a discounted rate compared to purchasing each item separately. This strategy not only increases AOV but also moves more inventory.
5. Volume Discounts
Volume discounts and bulk pricing can be very effective in persuading customers to buy more. Offering a discount for purchasing multiple units of a product can make customers feel they are getting better value for their money. For instance, a “Buy two, get one free” offer can encourage customers to buy more than they originally intended, thereby increasing the AOV.
You can also offer incremental discounts based on the quantity purchased or amount spent. For example, you can offer a 10% discount on a purchase value of $100, 20% discount on $200 purchase value, and $30% discount on a purchase value of $300 or more. By offering multiple higher discounts on different purchase value, you can easily increase the AOV of your products.
Bottom Line
Increasing the Average Order Value (AOV) for your products is a strategic approach to enhancing your business’s profitability.
By implementing techniques such as upselling, cross-selling, product bundling, free shipping thresholds, loyalty programs, limited-time offers, personalized recommendations, and easy financing options, you can encourage customers to spend more per transaction.
Each of these strategies, when executed thoughtfully, can contribute significantly to increasing the average order value for your products.
